Monthly Archives: September 2016

Foundation Confusion: Is it Charity or Branding?

48868459-cachedNew Orleans   Poor Donald Trump. He just can’t catch a break it seems, and somehow the defense that “that’s business,” doesn’t seem to be working for enough people. One of the latest examples revolves around the Trump family foundation.

An exhaustive report in The Washington Post found that Trump has used the foundation to make a $25000 political contribution in Florida, buy pictures of himself, and pay business expenses, all of which are strictly forbidden by the tax exemption rules of the Internal Revenue Service for private foundations. Even with the political donation, all he got was a hand slap, even though he had also filed false information in the IRS Form 990. Worse for Trump, the problems in his own foundation, probably make it a wee bit harder for him to make the dealings of the Clinton Foundation as big an issue as he would like, but maybe not, we’ll see.

It’s easy to see how Trump would be confused. Like many, heck, maybe most, business people and the superrich, they seem to easily be confused about the difference between charity, you know, those gifts from the heart, and branding, which means little more than making your business look better to the public and your customers. In the Trump and common business mindset, a foundation is a way to hide some profits tax free and to promote your business interests behind the veil of good works. This whole charity thing in Trump’s view is probably just “for losers.”

The New York Times carried a full-page ad recently for the sole purpose of allowing a national, publicly funded new museum, the long awaited, National Museum of African American History & Culture, a branch of the Smithsonian, to thank its so-called “founding donors for their support & generosity.” Talk about a list of blue chip corporations and big named rich from entertainment, sports, and the like, including of course big foundations that have been shielding wealth for corporations for generations. In the $5 million list were 3M, American Express, the Boeing Company, GE, Target, UnitedHealth Group, and Walmart, along with the Ford Foundation and the Rockefeller Foundation for the old rich. Kaiser Permanente was the only nonprofit on that list. Michael Jordan got on the list, still smarting that he has become the poster boy along with Trump currently for “business first, the rest of you later,” and trying to desperately rebrand himself. From there to the $1 million list, I counted sixty more corporations and corporate foundations.

I’m not saying there was no pride or generosity involved, but the purpose of the ad and much of what motivated the level of the contributions was all about branding and purchasing the public’s good will. Nor am I saying that the museum was not a “good cause, but it speaks volumes that the American public and its taxpaying dollars were never acknowledged, even though they are absolutely the most important “founding donor.”

We already know that part of the reason the IRS doesn’t do more to separate the branding from the actual charity, is that Congress is in a bloody battle with the agency and has decimated its funding, particularly of the nonprofit and tax exempt division of the Service. So, don’t expect to see more justice and accountability come to supervision and oversight of corporate foundations as tax dodges, slush funds, and playthings of executives and the rich. That’s what they think foundations are for, and there’s no one really out there to tell them differently or make them do better.

Facebooktwitterredditpinterestlinkedinmail

Is Wells Fargo Forcing Regulators and Politicians to Finally Take on the Banks?

Wells Fargo Chief Executive Officer John Stumpf prepares to testify on Capitol Hill in Washington, Tuesday, Sept. 20, 2016, before Senate Banking Committee. (AP Photo/Susan Walsh)

Wells Fargo Chief Executive Officer John Stumpf prepares to testify on Capitol Hill in Washington, Tuesday, Sept. 20, 2016, before Senate Banking Committee. (AP Photo/Susan Walsh)

New Orleans   Ok, I’ve always been clear that Wells Fargo for more than a decade has led my list as the most evil and customer-exploiting of the nation’s big banks, and I am loving the fact that they have been caught red handed in fraud and are having their comeuppance. No one can ever take a victory lap with the megabanks though, but for a fleeting minute there’s hope that just maybe the government might be forced to finally start taking the steps to straighten out some of their commonplace, but predatory business practices.

First, let’s savor the hot mess that is now Wells Fargo. The California state treasurer, where Wells Fargo is headquartered and has been frequently sanctified, has reacted to the bank’s fraud by suspending the bank from handling municipal bond sales in California and a number of other lucrative practices. The Wells Fargo board, realizing the light hand slap to bank executives and their efforts to push this off as if 5000 fired fraudsters were just a few bad apples wasn’t getting it, finally starting to at least pretend to do its job. They permanently retired the head of community banking who had presided over this mess and clawed back $19 million from her golden handshake. They told the CEO who had snoozed and covered up all of this mess that he was working for free during their investigation of this mess and would not get a bonus for 2016 and clawed back $41 million in stock awards from him. Congress is taking another shot at the CEO soon as well. His head still may roll, as rightly it probably should. A couple of fired workers are suing the company,  because they had refused to go with unethical and unrealistic sales practices.

At the heart of this mess is Wells Fargo’s boiler room sales operation and the holy grail of a lot of big bank and financial institution mischief: cross-selling. Cross-selling is simple to understand. Once a bank has a customer, they view that customer as a mini-market for them to hustle all manner of products to Joe Schmoo. In the belly of these beastly banks they all do this, and they all have giant boiler rooms trying to move product with little supervision and high sales quotas.

Wells Fargo was caught, but it is something they are all doing in general, even if some of them may not have gone with outright Wells Fargo fraud. The Wall Street Journal looked at complaints filed with the Consumer Financial Protection Bureau and found that Wells had 1576 complains about account management, while Citigroup had 1722 or 1.8 complaints per billion dollars of deposits. Bank of America had 1.7 compared to Wells Fargo’s 1.3 complaints per billion and JP Morgan Chase had 1.1 complaints per billion. I’m grasping a straw of hope in reading that “Analysts say the problems at Wells Fargo put pressure on government agencies to more closely regulate the cross-selling of products and incentive compensation tied to tough sales goals.” Hosanna!

It’s a safe bet that since they are all doing it, they are likely all dirty on this as well. While the government and politicians are finally starting to grow a backbone in dealing with banks, we can hope it lasts long enough to clean up this high pressure, direct theft from customers.

Facebooktwitterredditpinterestlinkedinmail